Press Releases

Bloomberg News, 8-12-2004 (New York)

Citigroup's Travelers Settles Medicare Fraud Lawsuit

By David Glovin

Citigroup Inc.'s Travelers Insurance Co. and United Healthcare Insurance Co. agreed to pay $20.6 million to settle a civil suit by the U.S. government accusing them of cheating the federal Medicare program.

The allegations were brought to the government by a former Travelers employee, Robert Klimasewiski, who worked for the company from 1978 to 1995. He made the claims in his own suit, which the government later adopted, court papers say.

The 1999 suit claimed the two companies, which helped administer Medicare in several states, defrauded the federal health care program for people over 65. According to the suit, Travelers and United Healthcare got excessive reimbursements from the government by over-billing for care provided by doctors and hospitals.

The government's investigation revealed that Travelers kept two sets of books: its actual costs and costs as reported to the government, interim U.S. Attorney David Kelley said in a statement.

Under the settlement, Travelers, the insurance unit of the world's biggest financial services company, will pay $10.9 million. United Healthcare, a division of UnitedHealth Group, Inc., the biggest U.S. insurer, will pay $9.7 million.

Neither Travelers nor Minnetonka, Minnesota-based United Healthcare admitted wrongdoing. Travelers, which is headquartered in New York, said in a statement that it settled the case Ato avoid distraction of further litigation.

A United Healthcare spokesman declined to comment.

Klimasewiski said in his complaint that the scheme began as early as 1978 and continued after United Healthcare assumed the Travelers Medicare obligations in 1995. He says Travelers promised to provide cost savings and eliminate waste and instead committed the very acts they were hired to police and extirpate.

Klimasewiski made use of a law that lets individuals sue on the government's behalf for a violation of the federal False Claims Act. The government subsequently adopted the suit as its own. Klimasewiski will get a share of the settlement.

This is further vindication of the way whistle-blowers end up contributing to the efficiency of government programs, his lawyer, Thomas Engel, said.

The suit originally alleged that the government was cheated out of more than $700 million. That amount was later reduced.

The case is U.S. ex rel. Klimasewiski v. UnitedHealth Group, 99 cv 11139, Southern District of New York.